What Should I Look For in a Bank?

Selecting a bank is not a difficult process, and armed with information, you can make a good choice as opposed to a mediocre choice in your banking institution. However, making the choice more complicated is the fact that there are a number of ‘online only banks’ that are competing for your business. This is actually good, because anytime there is competition among consumer based businesses; the entities vying for your business are more inclined to improve their service and offerings.

What Are the Basics? Here is a list of banking basics that you should know before looking for a bank. If an institution does not have one of these, you should find out why.

Free interest bearing checking (most provide completely free checking accounts, but some have a minimum monthly amount to which you must keep your balance at or above or there will be a charge).

• Free savings
• Free ATM / Debit cards
• Credit Card offerings
• Lending options (auto, mortgage, personal)
• Money Market Accounts
• Certificate of Deposit accounts

National vs. Local. In the past few years, the banking industry has undergone a consolidation phase where the small banks have bought out by the medium banks which in turn have been swallowed up by the large banks. Chances are high that you have had this experience with one or more of your accounts. Other large national banking entities who are vying for your money are the ‘Internet only’ banks. More about these later.

A bank with a real building into which you can walk and speak to a real live employee might suit your tastes better. These types of banks tend to be more personal and helpful, but that’s not always the case. Locally owned banks pride themselves on being grounded in the community in which they serve. Not only will you see their buildings in your area, but you will also see their advertisements in your local paper, or radio station, as well as sponsoring local events. Some national chains have offices in your community.

Bank vs. Credit Union. One institution that you should locate and check out in your area is a Credit Union. Much like a bank, they have a few ‘selling points’ that they like to push. They are locally owned by members who join ranks in order to place their money into an institution that is governed by them indirectly. Membership sometimes is limited to certain groups, like teachers or firemen, etc, but that is becoming quickly a thing of the past. Now Credit Unions offer membership to those who live in a specific county or location.

Their big selling point is their personal “hands-on” approach to your finances. They appear to be more “tuned in” to you as a customer because, since client is a member, they are accountable to each one. Not bad. They feature great interest rates on their products as well. They have caught up to the Internet banking trend as well, so you can take advantage of that too.

Internet Banks. These have their presence only on the Internet or by phone. There are no ‘brick and mortar’ buildings in your community into which you can walk and talk to someone about your financial concerns. They generally have a wide appeal to those who are very savvy in personal banking and seek out the best place to put their money. Because these banks have no buildings and fewer employees, they claim to offer higher interest rates and lower fees. They also offer the ability to call any time toll-free to talk to an agent. That is a bonus except that you often are speaking with someone who might live across the nation and may not be sympathetic with your situation. Also, you might find that you are speaking with a ‘message taker’ instead of someone who can really help you. If they always say ‘I will have to get back with you on that,’ or ‘I will have someone return your call in 24 hours,’ you probably have one of their hired companies who answer the phones for them and perform rudimentary functions along with basic dissemination of information (which might include the tactic of trying to send you to the website to get more information). This can be frustrating.

Online Banking. Whichever institution becomes your choice, you will almost certainly acquire the ability to manage your accounts online or via an Internet connection. The main benefit of online banking is instant “access” to your money and accounts. When the institution is closed for the day, weekend or holiday, you can log on and manage your money, check your balance, and see if an item has cleared, etc. You can also transfer money between accounts and make payments on loans or to other creditors outside of the institution. All of these are very compelling reasons for signing up for this feature.

What to Watch Out For. Be wary of these items that might catch you unawares:

• Fees. Banks are required to disclose their fees, but they might be in small print on a document that you sign without reading. Be sure to read everything placed in front of you when it comes to your financial transactions so that you do not get caught in a fee that you did not know about.
• Posting Times. Sometimes your money might not be readily available for access to you as soon as you think. That’s because banking institutions have certain times that they update the financial transactions that affect your accounts which come from outside sources. Be sure you ask about this and know what those times are. This might be of concern to you if you automatically deposit your paycheck to your account from your employer. However, generally, if you make a transaction within the bank itself, the balance will be updated immediately.
• Minimum Balance Requirements. Some banks require a minimum balance in order to avoid fees or obtain other preferred customer benefits. Make sure you know what these requirements are.
  If you are very careful and do your homework, you can find a great bank with which to do business. The solid relationships fostered in such an institution can provide you years of satisfaction.

If you are very careful and do your homework, you can find a great bank with which to do business. The solid relationships fostered in such an institution can provide you years of satisfaction.